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Daily Financial Market News

Thu, 21 Sep 2017 13:30:00 GMT

FOMC-Fueled USD Runs into Resistance: GBP/USD, EUR/USD Primed

FOMC-Fueled USD Runs into Resistance: GBP/USD, EUR/USD Primed Menu    Search DailyFX Home   Rates   Charts Market News        Real-Time News Daily Briefings Forecast Market Alerts DailyFX Authors Articles Technical Analysis        Analyst Picks Support & Resistance Daily Technical Reports Pivot Points Sentiment Articles Algorithmic Trading Calendars        Economic Calendar Webinar Calendar Central Bank Rates Dividend Calendar Education Beginner Intermediate Advanced Expert Free Trading Guides DAILYFX PLUS Toggle navigation News News   Market News Real-Time News Daily Briefings Forecast Market Alerts DailyFX Authors Articles Market News Headlines Strong Canada Consumer Price Index (CPI) to Cap USD/CAD Rebound Bitcoin Prices Under Pressure- Time to Buy? 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Click here to dismiss. × Get Your Free Trading Guides With your broad range of free expert guides, you'll explore: The basics of forex trading and how to develop your startegy Foundational knowledge to help you develop an edge in the market What's ahead for major FX pairs, Gold, Oil and more Download a Free Guide Want to hold off on improving your trading? Click here to dismiss. EUR/USD EUR/USD Low ------ High ------ View More Note: Low and High figures are for the trading day. News Post FOMC, BoJ Price Action Setups (Sept. 21, 2017) EUR/USD Steady as Draghi Avoids Mention of Monetary Policy FOMC-Fueled USD Runs into Resistance: GBP/USD, EUR/USD Primed GBP/USD GBP/USD Low ------ High ------ View More Note: Low and High figures are for the trading day. News GBP Coiled Ahead of Make-or-Break Brexit Speech SPX Wavers but Holds, VIX Below 10, Pound Ready for Volatility It’s Prime Minister May’s Turn to Charge or Sink GBP/USD USD/JPY USD/JPY Low ------ High ------ View More Note: Low and High figures are for the trading day. News Japanese Yen Technical Analysis: Year’s Lows Creep Back Into Focus USD/JPY Trend: Is This a Long Term Bottom? Post FOMC, BoJ Price Action Setups (Sept. 21, 2017) Gold Gold Low ------ High ------ View More Note: Low and High figures are for the trading day. News DailyFX Morning Digest: US Dollar Getting Much Needed Lift from FOMC US Dollar Bottoming Process May Finally Be Starting Crude Oil Price Hit 4-Month High, Gold Drops on FOMC Outcome Oil Oil Low ------ High ------ View More Note: Low and High figures are for the trading day. News Crude Oil Price Hit 4-Month High, Gold Drops on FOMC Outcome Gold Price Drop May Resume on Steady FOMC Policy Outlook Crude Oil Prices Remain Bid as Iraq Hints at More OPEC Measures BITCOIN BITCOIN Low ------ High ------ View More Note: Low and High figures are for the trading day. News Bitcoin Prices Under Pressure- Time to Buy? Near-term Setups in EUR/USD, Bitcoin & Ethereum Pound Surges, Bitcoin Plummets Ahead of Pivotal FOMC Meeting View More   More Real-Time News Facebook Twitter Youtube Google + FOMC-Fueled USD Runs into Resistance: GBP/USD, EUR/USD Primed by  James Stanley, Currency Strategist  Price action and Macro. Connect via: Talking Points: - Yesterday’s FOMC rate decision saw the bank announce the start of balance sheet reduction in October along with the expectation for another rate hike in December. - This produced a quick bout of USD-strength that lasted for about ten minutes into Chair Yellen’s presser, at which point resistance showed and has continued to hold. Does this new information have the potential to reverse the Greenback’s 2017 down-trend? - Want to see how Euro, GBP, and USD have held up to the DailyFX Q3 Forecasts? Click here for full access . To receive James Stanley’s Analysis directly via email, please sign up here . Yesterday brought a widely-awaited Federal Reserve rate decision, and at that meeting the bank announced that balance sheet reduction would begin in October. This wasn’t really a surprise, as the Fed has been talking about this since March . But what may have been a bit more unexpected was just how hawkish the Fed turned out to be in terms of forward-looking rate expectations in the face of the fall seen with inflation throughout this year. Earlier in the year, Chair Yellen said that she thought the drop in inflation was transitory; but a continued lag in prices seems to indicate that whatever we’re seeing is a bit more than transitory. Nonetheless, the Fed reiterated their view on rate expectations to the end of 2018. The Fed said that they’re expecting one more hike this year, three more next year, two in 2019 and one in 2020. If this goes through as planned, the Federal Reserve calculates the final destination for rate policy, or the terminal rate to arrive at a range of 2.75-3% at some point in 2020. This would be significantly below longer-term historical averages for interest rates so, in essence, it still displays a hint of dovishness. This also looks to address fears of ‘over-tightening’, which appear to be designed to pacify bond investors and fixed income traders that might think twice about carrying fixed-income exposure in a rising rate environment. The near-immediate response to yesterday’s FOMC rate decision was a quick pop of USD-strength that lasted for about ten minutes into Chair Yellen’s press conference. As DXY ran into resistance around the 92.50-92.60 area, a range began to show as we moved into the Asian session, with a quick drop coming in around the European open. Does this have the makings of a young bullish trend? It’s still too early to say, but this area of resistance would first need to yield before such a scenario might seem likely. U.S. Dollar via ‘DXY’ Four-Hour: FOMC-Fueled USD Pop Up to Resistance Chart prepared by James Stanley Shortly after the Fed announced their intent to begin trimming the balance sheet in October, the Bank of Japan reiterated their intense dovish stance . This further highlights the deviation amongst large, global Central Banks as we see tightening efforts near or underway in much of the developed world while the Bank of Japan continues with a massive stimulus program. This can also denote continued weakness in the Yen, as the BoJ is one of the few Central Banks that isn’t starting down some type of issue with inflation as growth begins to show a bit more consistently. In Japan, inflation continues to lag well-below the bank’s 2% goal, and despite the fact that those goal posts have been shifted later now six times, the BoJ continues to expect to finally hit that target in the year 2020. This additional drive of Yen weakness, combined with USD-strength emanating from FOMC helped USD/JPY to move up to test a key resistance zone that runs from 111.61-112.43. USD/JPY Four-Hour: Resistance Zone Test after FOMC, BoJ Chart prepared by James Stanley The above two drivers can open the door to a couple of interesting scenarios. For traders that want to fade this recent batch of USD-strength under the anticipation of the longer-term bearish trend continuing, bullish setups in EUR/USD and GBP/USD could be attractive. We’ve been following a key area of support in Cable that’s held-up well since last week’s BoE meeting . This is the 50% retracement of the ‘Brexit move’ in GBP/USD, and this level at 1.3478 has continued to hold the lows since last week’s bullish breakout. GBP/USD Hourly: Fibonacci Support with Subordinated Support Applied Chart prepared by James Stanley We discussed a short-term range-like formation showing in EUR/USD after the pair failed to take out the 1.2100 level . Yesterday’s quick batch of USD strength brought prices down to the support size of that range, which has, at least so far, held-up with a slightly higher low. This can open the door to bullish setups under the anticipation that new highs may be on the radar. EUR/USD Four-Hour: Short-Term Range At Top of Longer-Term Trend Chart prepared by James Stanley For USD-strength continuation, USD/JPY can remain as attractive. As we looked at above, that resistance zone from 111.61-112.43 is in the process of being tested. This can allow for traders to look for higher-low support if looking to position-in ahead of a potential bullish continuation move. On the chart below, we’re looking at three potential support zones above the prior swing-low. USD/JPY Hourly: Shorter-Term Support Potential Within Longer-Term Resistance Zone Chart prepared by James Stanley --- Written by James Stanley , Strategist for DailyFX.com To receive James Stanley’s analysis directly via email, please SIGN UP HERE Contact and follow James on Twitter: @JStanleyFX DailyFX provides forex news and technical analysis on the trends that influence the global currency markets. DISCLOSURES Related Articles Previous Articles From daily fundamentals Related Prev Articles   Strong Canada Consumer Price Index (CPI) to Cap USD/CAD Rebound   Bitcoin Prices Under Pressure- Time to Buy?   AUD/USD Range Snaps Following FOMC; RBA Tames Bets for 2017 Rate Hike   US Dollar Bottoming Process May Finally Be Starting   Crude Oil Price Hit 4-Month High, Gold Drops on FOMC Outcome   Fed Set to Start QT as the U.S. Dollar Remains Near 2.5 Year Lows   EUR/USD Battles at 1.2000, Cable Bounces Off of Support Ahead of FOMC   USD, Yen and CAD in the Spotlight Ahead of FOMC, BoJ   Pound Surges, Bitcoin Plummets Ahead of Pivotal FOMC Meeting   GBP Drives to Highs on Hawkish BoE: USD Rip and Dip on CPI Advertisement Upcoming Events Economic Event Importance Actual - Forecast - Previous Importance Actual - Forecast - Previous Forex Economic Calendar A:  Actual   F:  Forecast     P:  Previous

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